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Another Dividend Hike at Legg Mason - Analyst Blog

Continuing with the trend of increasing dividend annually
since 2010, global asset management firm
Legg Mason Inc.
(
LM
) declared a 23.1% hike in its quarterly cash dividend to 16
cents per share. The new dividend will be paid on Jul 14 to
shareholders of record as of Jun 17. Though the revelation is not
a surprise, it definitely adds to investors' optimism.

Legg Mason has a record of consistently paying regular quarterly
dividend. Even during the financial crisis, the company did not
discontinue dividend payment though slashed the value per share
from 24 cents to 3 cents in 2009. However, along with the revival
of its performance since 2010, the company has been making
efforts to enhance stockholder value through efficient capital
deployment activities.

Notably, in the first nine months of fiscal 2014, the company
repurchased shares worth about $270.0 million and paid $46.3
million through dividends. Further, driven by a sound liquidity
position, Legg Mason has been able to undertake strategic
acquisitions in the past couple of years. Recently, the company
announced its decision to acquire New York-based private asset
manager QS Investors to expand its global investment products
portfolio. We expect Legg Mason's capital generating ability to
continue benefiting the company and its shareholders.

These features make Legg Mason a solid income pick. Further, if
you are looking to benefit from this earnings season, Legg Mason
is the right candidate in the investment management space. This
is because, the company has the right combination of elements -
Zacks Rank # 3 (Hold) and a positive
Earnings ESP
- to post for an earnings beat when it reports its fiscal
fourth-quarter 2014 results on May 1. Needless to say, an
earnings beat generally translates to stock price
appreciation.

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